IntroductionThe Supreme Court decision in T (Children)[2012] UKSC 36 reaffirmed the general practice of not awarding costs against a party, including a local authority, in the absence of reprehensible behaviour or an unreasonable stance by that party.

This case started as a result of care proceedings brought by a local authority which involved a lengthy fact finding hearing. The local authority sought findings which included allegations made against non-parties. The non-parties included the children's grandparents who were invited to intervene in the proceedings to answer the allegations against them. The grandparents were not eligible for public funding and so borrowed money to afford legal representation at the hearing. They were completely exonerated in the fact finding judgment and consequently sought the costs of their representation from the local authority. HHJ Dowse in the care proceedings rejected their application.

The grandparents appealed to the Court of Appeal where this decision was overturned and costs were awarded against the local authority (Re T[2010] EWCA Civ 1585, [2011] 2 FLR 264). The local authority was granted permission to appeal to the Supreme Court with the requirement that, whatever the result, the grandparents' entitlement to their costs from the local authority would remain.

As the Supreme Court notes, it is ironic that in a case about costs, the advocates prepared and attended the hearing on a pro bono basis.

Cafcass and the need to intervene Cafcass intervened due to its concerns about the effect of the decision of the Court of Appeal on the welfare of all children who find themselves the subject of family law proceedings, where serious allegations of abuse have been made and fall to be determined by the court.

Cafcass was concerned that the potential effect of the decision of the Court of Appeal was to place too great an emphasis on local authorities to make quasi-judicial decisions against whom allegations can be proved, where such decisions are more properly made by the court. In Cafcass' view this ran the risk that local authorities would not pursue all relevant allegations for fear of a costs' penalty. Clearly this would redound to the detriment of subject children.

The Supreme Court addresses this concern at paragraph 43 of the judgment and highlights the statutory duties of a local authority to investigate allegations, noting:

"In this respect the role of the local authority has much in common with the role of a prosecuting authority in criminal proceedings."

The judgment concludes:

"It is for the court, and not the local authority, to decide whether the allegations are well founded."

The principle of costs in Children Act proceedings – costs do not usually follow the eventWe all know that the principle concerning costs in Children Act proceedings is different from that in other civil matters. Rule 28.2 of the Family Procedure Rules 2010 (FPR) expressly disapplies key parts of the Civil Procedure Rules (CPR). Most significant of the CPR rules excluded is rule 44.3(2) which states that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party – 'costs follow the event'. CPR 44.3(4) sets outmatters to which the court must have regard when deciding issues of costs.

The Supreme Court explained at paragraph 11 of its judgment that rule 44.3(4)(b) (which states 'whether a party has succeeded on part of his case, even if he has not been wholly successful')

"is relevant in relation to a regime where the general rule in (2)(a) applies. For this reason we do not see that it has any direct relevance to family proceedings...The other rules are simply examples of circumstances that will be relevant when considering the result that justice requires in the individual case. In family proceedings, however, there are usually special considerations that militate against the approach that is appropriate in other kinds of adversarial civil litigation. This is particularly true where the interests of a chid are at stake. This explains why it is common in family proceedings, and usual in proceedings involving a child, for no order to be made in relation to costs."

Case law sets out the basis by which this principle has developed. Costs are not generally awarded unless exceptional circumstances are in play. The judgment makes clear that the reasons for departing from the principle that costs follow the event differ, depending upon the nature of the family proceedings. Where money is a factor the judgment highlights the relevance of CPR 44.3(5) (the conduct of the parties) to the issue of costs. Paragraph 13 states that "[w]here a local authority has caused costs to be incurred by acting in a way which was unreasonable justice may well require that the local authority pay the costs in question" (Cf Re R (Care: Disclosure: Nature of Proceedings) [2002] 1 FLR 755; Re X (Emergency Protection Orders)[2006] EWHC 510 (Fam), [2006] 2 FLR 701; Coventry City Council v X, Y and Z (Care Proceedings: Costs) [2011] EWHC 1045, [2012] 1 FLR 1045).

What was striking about T (Children) was that the court and all parties accepted that the local authority had acted reasonably in seeking the findings that it did.

In support of the principle of no costs – the Court of Protection rules favour a similar approachThe local authority invited the Supreme Court to consider by way of analogy the rules of the Court of Protection. This supported its appeal, because there is a general rule of no order for costs in proceedings concerning personal welfare (cf Court of Protection Rules 2007(SI) 2007/1744 rule 157).

Rule 159 permits departure from the general rule as applied by Baker J in the case of G v E and Manchester City Council and F [2010] EWHC 3385 (Fam) and endorsed on appeal by Hooper LJ in [2011] EWCA Civ 929 paragraph 17.

The decision to hold a split hearing is a judicial decision, it doesn't affect the principles to be applied to the issue of costsParagraphs 26-28 of the judgment consider the relevance of a split hearing to the issue of costs. Lord Phillips emphasises that the decision to hold a split hearing is a case management decision taken by the Court (cf Lady Hale in Re B (Children) (Care Proceedings: Standard of Proof) (Cafcass intervening)[2008] UKHL 35, [2009] AC 11 at paragraphs 74-76). He goes on to explain that this does not affect the principles to be applied by the court when dealing with costs but the court notes that it may have a practical impact on the court's decision.

The decision of the Court of Appeal in T (Children) marked a departure from precedentThe judgment notes that this appears to be the first occasion on which a local authority was ordered to pay costs in public law proceedings in the absence of criticism of its conduct. Perhaps the reason for this has been reliance on the public policy reasons cited by Cazalet J in Re M (Local Authority's Costs) [1995] 1 FLR 533:

"As a matter of public policy it seems to me that where there is the exercise of [a] nicely balanced judgment to be made by a local authority carrying out its statutory duties, the local authority should not feel that it is liable to be condemned in costs if, despite acting within the band of reasonableness (to adopt the words of Wilson J), it may form a different view to that which the court may ultimately adopt."

Cazalet J was relying on the judgment of Wilson J (as he then was) in the earlier decision of Sutton London Borough Council v Davis (No.2) [1994] 1 WLR 131. Sutton is a case involving the legal attempts by a child minder to overturn a local authority's decision not to register her. On appeal the local authority sought to overturn the costs order made against it and applied by way of analogy the principle that costs are not usually ordered in children's cases. Wilson J upheld the costs order but accepted that the proposition of no order for costs in children's cases had been applied for many years in the Family Division, stating (at P1319):

"Thus, even when a local authority's application for a care order is dismissed, it is unusual to order them to pay the costs of the other parties. But the proposition is not applied where, for example, the conduct of a party has been reprehensible or the party's stance has been beyond the band of what is reasonable."

The Supreme Court concludes in respect of the reasoning in the Sutton decision at paragraph 18:

"This judgment confirmed that it was not the normal practice to award costs in child care cases. It contained, however, the seeds of what was to follow, for in effect Wilson J applied the general common law rule that costs follow the event in adversarial cases."

This line of reasoning by Lord Wilson is developed further in the private law contact case costs appeal of Re J[2009] EWCA Civ 1350 in which the Court of Appeal awarded a mother 2/3 of her costs following a fact finding hearing in which 2/3 of her allegations were held to be established and where she sought her full costs of the hearing.

Wilson LJ (as he then was) gave the judgment of the court and at paragraph 19 of that judgment was keen to emphasise:

"I would be concerned if our exercise of discretion in relation to the mother's costs in this case today were to be taken as an indication that it was appropriate in the vast run of these cases to make an order for costs in whole or in part by reference to the court's determination of issues of historical fact."

This time the Supreme Court judgment addresses the reasoning in the case in this way (paragraph 22):

"This decision could have been justified on the ground that the costs in question had been caused by the father's unreasonable refusal to admit the facts that were ultimately proved against him, but Wilson LJ's reasoning appears to have been that simply that a party who makes allegations of fact against another party that prove to be unfounded, or who challenges allegations of fact that prove to be well founded, should be liable for the costs of resolving those issues, whether his conduct was reasonable or not."

Having addressed the Sutton and Re J decisions in this way, the Supreme Court then addresses the judgment of Wilson LJ in Re T at paragraph 18 in the Court of Appeal where it held that:

"Where in care proceedings a local authority raise, however appropriately, very serious factual allegations against a parent or other party and at the end of a fact finding hearing the judge concludes that they have not established them, the general proposition ( – of no order as to costs – ) is not in play."

Wilson LJ gave the judgment of the Court of Appeal in Re T save the final paragraph of the judgment (paragraph 27) by Coleridge J and this states:

"These very serious allegations were properly put before the court and properly challenged by the grandparents and, in the event, the grandparents were exonerated. In these circumstances it is only fair, in my judgment, that the public authority that pursues such allegations meets the costs of the involvement by, for instances, the grandparents."

It is these paragraphs from the Court of Appeal with which the Supreme Court appears to have disagreed. The judgment has overturned it as an issue of principle (cf paragraph 29) stating that a local authority in care proceedings should not be liable. Cafcass' primary concern focused on the potential increase in costs orders against local authorities, the consequence for local authority budgets and thus the children for whom local authorities have a statutory responsibility. However, Cafcass had also argued that unless the decision was overturned, potentially interveners could also have costs awarded against them in circumstances where they are wrongfully held to have challenged allegations against them. This could result in a reluctance to intervene, which would be to the detriment of the conduct of these proceedings and the welfare of children.

Costs are a matter for the court, access to justice is a matter for Parliament The final section of the judgment looks at the difficult issue of lack of funding for interveners in fact finding hearings of this type. The Grandparents' Association intervened in the appeal to the Supreme Court, seeking the Court of Appeal's decision to be affirmed and highlighting the difficulties for grandparents in this area.

There can be no doubt that there is an apparent funding gap in proceedings of this type. Whilst non-means and non-merits funding is available for children, parents and those with parental responsibility, it is not available for others on the same basis. The cost of legal representation is high, as illustrated by this case. The judgment is clear that it does not however follow that any deficiency in funding should be made up out of the funds of the local authority bringing care proceedings (paragraph 40).

Cafcass, through its involvement in both public and private law proceedings, is extremely aware of the numbers of litigants in person who are unable to afford legal representation. However this judgment in T (Children) makes clear that the question of whether it is just to make an award of costs against a public authority must be distinguishable from the question of whether a litigant's costs should be publicly funded. In the judgment of the Court:

"The former question is for the court; the latter for the legislature" (paragraph 39).

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Dorothea Gartland, led by Teertha Gupta QC, represented Cafcass in T (Children) in the Supreme Court, instructed by Penny Logan of Cafcass Legal.